CONSISTENTLY DELIVERS

Jul 5, 2016

Tax Policy Update

Russ Sullivan "Wednesday's closed door meeting of the Joint Tax Committee is the first in decades (in recent memory).  The reason?  Members want to speak strongly on behalf of constituents against the Treasury's proposed debt vs. equity regulations, but don't want to be quoted publicly and criticized for supporting inversions." 

Russ Sullivan
Partner, McGuireWoods LLP

 

The Joint Taxation Committee is set to meet behind closed doors on July 6 to discuss issues with the Treasury’s proposed regulations under Section 385 of the Internal Revenue Code. Assistant Treasury Secretary for Tax Policy Mark Mazur and Deputy Assistant Treasury Secretary for International Tax Affairs Robert Stack will appear before the panel to address lawmakers’ concerns about the proposed rulemaking.

LEGISLATIVE LANDSCAPE

Speaking of Inversions… The Treasury Department is holding firm on its comment letter deadline on the proposed I.R.C. § 385 regulations, now just two days away. On Wednesday, Treasury officials Mark Mazur, the assistant secretary for tax policy, and Robert Stack, deputy assistant secretary for international tax affairs, will be on the Hill for a closed door bipartisan, bicameral meeting to address…

O’ Orrin, Where Art Thou? For weeks now, Sen. Orrin Hatch has promised to release his corporate integration proposal. The plan was supposed to drop in June. It is now July and the plan to scrap the double tax on corporations is yet to be released. Hatch is reportedly still waiting on final numbers form the Joint Committee on Taxation. Just last week, Hatch indicated that the plan may not be available by the Republican National Convention, which begins on July 18. After the national conventions, Congress will not be back in session until after Labor Day. So, it is unclear when the proposal will be finalized. While final details for Hatch’s corporate integration proposal are not yet available, he would likely allow…

To the Left, To the Left. The latest draft of the Democratic Party’s platform was released on July 1 in advance of the July 25 Democratic National Convention. The document takes a step to the left, repackaging several ideas from Democratic leaders, including Hillary Clinton and Bernie Sanders. In addition to promises to raise the minimum wage, impose a millionaire surtax, and update the Glass-Steagall Act, it also proposes…

The Price is Right…Left…All Over the Place. Both the Tax Foundation and the Citizens for Tax Justice (CTJ) have placed a price tag on the House GOP’s tax blueprint. While the Tax Foundation has scored the plan at $191 billion over 10 years, CTJ believes the plan would cost $4 trillion. The conservative-leaning Tax Foundation uses a dynamic scoring model to…

House to Consider Financial Services Bill After Delays. The House is expected to consider H.R. 5485, the FY2017 Financial Services appropriations bill this week, after a 25-hour Democratic sit-in for gun-control caused Republican leaders to adjourn the House through July 4.

The House Appropriations Committee approved the bill earlier this month on a largely party-line vote of 30-17. The bill totals $21.7 billion in funding — $1.5 billion below the fiscal year 2016 enacted level and $2.7 billion below the President’s budget request. The House version of the bill would provide…

President Signs the Recovering Missing Children Act. On June 30 President Obama signed the Recovering Missing Children Act ( H.R. 3209) into law. The bill was introduced by Reps. Erik Paulsen (R-MN) and Joe Courtney (D-CT), and it would allow the Internal Revenue Service to share tax return information with state and local law enforcement agencies searching for missing children, while maintaining safeguards for sensitive taxpayer information. The bill would have no effect on federal revenue for fiscal years 2016 through 2026, according to a report released by the Joint Committee on Taxation. The bill was passed by the House on May 10 and received unanimous consent in the Senate on June 16.

REGULATORY WORLD

New Guidance for “Qualified Intermediaries.” In Notice 2016-42 , the IRS issued guidance setting out a proposed Qualified Intermediary (“QI”) agreement revising and updating the current agreement, Rev. Proc. 2014-39, published in July 2014. The guidance expands the existing GI agreement by providing more detailed procedures with regards to how qualified intermediaries satisfy their compliance review obligations. It also provides updates on allowing eligible entities to act…

Treasury Releases CbC Final Regulations. Treasury recently finalized the regulations for Country-by-Country (“CbC”) reporting requirements. The regulations contain guidance on information reporting requirements imposed on certain multinational enterprise group with a U.S. parent entity where the group’s annual revenue is $850 million or more. Importantly, the regulations do not make the information public. The CbC reporting requirements…

Apple Tax Verdict May be Delayed. The European Union’s decision on Apple’s tax dealings with Ireland may be delayed in light of the U.K.’s June 23 Brexit vote to leave the EU. For the past few years, the European Commission has been investigating whether individual countries’ tax deals granted to certain companies violate state aid rules. Since then, investigations have been opened in several EU member states. In October 2015, the EC published…

Fallout From Brexit. The UK’s decision to leave the European Union has created uncertainty in the political and regulatory environments both inside and outside of the UK government. Since London is an important international financial center, the UK is eager to…

CAMPAIGN CORNER

According to the latest Morning Consult Intelligence poll, if the elections were held today, Hillary Clinton has only a 5 percentage point lead over the presumptive Republican nominee, Donald Trump. 18 percent of Americans remain undecided on who to vote for in the November elections.

Source: Morning Consult

LINE ITEMS

  1. The IRS issued corrections to the proposed deemed stock distribution rules, Reg.-133673-15 , on July 5. The subsection numbers have been corrected in the proposed rules outlining the timing and amount of deemed distribution of stock. The proposed rules were originally issued in April and deal with deemed distributions of stock and rights to acquire stock.
  1. The Financial Stability Oversight Council removed the systemically important financial institution label from General Electric Co. This is the first time FSOC has removed this designation for a company. As a result of its removal from the list, General Electric will no longer have to comply with the regulatory requirements that come with the “systemically important” label.

LOOKING AHEAD

Congressional Activity

Wednesday, 7/6

Joint Taxation Committee – Closed Meeting
The full committee closed briefing on issues related to the Treasury Department's proposed regulations under the Internal Revenue Code section 385. Witnesses include Assistant Treasury Secretary for Tax Policy Mark Mazur; and Deputy Assistant Treasury Secretary for International Tax Affairs Robert Stack. Read more.

Agency Activity

Tuesday, 7/5

Internal Revenue Service
The IRS holds a meeting by teleconference of the Taxpayer Advocacy Panel Special Projects Committee on improving customer service at the Internal Revenue Service. For more information, contact Kim Vinci, 888-912-1227 or 916-974-5086.

Friday, 7/8

Securities and Exchange Commission
SEC holds a meeting by webcast of the Equity Market Structure Advisory Committee to receive presentations by the Regulation NMS and Trading Venues Regulations subcommittee chairs and consider recommendation for an access fee pilot and recommendations related to trading venues regulation. For more information, contact Arisa Tinaves Kettig, 202.551.5676.

Other Activity

Thursday, 7/7

Taxpayers Protection Alliance
The Taxpayers Protection Alliance holds a briefing on “Independence Day 2.0: Freedom from Our Outdated Tax Code.” Read more.